Bitcoin’s Correlation with Nasdaq Hits Lowest Since December 2021
19. January 2023
• Bitcoin’s 30-day correlation with Nasdaq has dropped to its lowest since December 2021, with a value of 0.29.
• This suggests that BTC is displaying opposite price action to Nasdaq relative to the asset.
• According to the latest weekly report from Arcane Research, institutional investors treating BTC as a risk asset, rising presence in the crypto markets and Bitcoin’s increased adoption are some of the reasons behind this correlation.
The latest weekly report from Arcane Research has revealed that Bitcoin’s 30-day correlation with Nasdaq has dropped to its lowest since December 2021. According to the report, the metric is now at a value of 0.29, which suggests that Bitcoin is displaying opposite price action to Nasdaq relative to the asset.
This correlation between Bitcoin and Nasdaq has been almost positive throughout most of 2022, suggesting that BTC was moving closely with the US equity then. However, the metric has now seen a plunge in recent days which implies that the movements in US markets have become less relevant to Bitcoin. There are a few reasons behind this correlation.
Firstly, institutional investors, who treat Bitcoin as a risk asset, have seen a rising presence in the crypto markets. This is largely due to the increasing acceptance of digital assets by traditional financial institutions, which has allowed for more capital to be invested in cryptocurrencies. Additionally, Bitcoin’s increased adoption and its emergence as a digital store of value has also contributed to this decrease in correlation.
Furthermore, the report notes that the correlation between Bitcoin and other assets such as the S&P 500 and gold has also decreased in recent months. This could be an indication that Bitcoin is becoming more of an independent asset class, rather than being tied to the traditional markets.
Overall, these findings suggest that Bitcoin is continuing to strengthen its position as an independent asset class, with its correlation to other major markets decreasing. This could be a sign of increasing confidence in the digital asset, as more investors feel comfortable investing in cryptocurrencies. As such, it could be an interesting time for investors to take advantage of the opportunities that this creates.